How Gas Plants Are Leading to Rising Bills

June 10, 2024

Summary:

  • Duke Energy’s carbon plan is riddled with the corporation’s own financial interest
  • The plan would add 9,000 megawatts of dirty methane gas to North Carolina’s power grid
  • The North Carolina Utilities Commission should reject Duke’s plan

 

By Sophie Loeb, Policy Analyst, Center for Progressive Reform

Duke Energy, North Carolina’s monopoly electricity provider, is currently undergoing one of the largest utility-led fossil fuel expansions in the entire country. Though the corporation publicly touts its carbon reduction climate goals, its investments in natural gas are leading to burning a “super pollutant” gas – methane, pictured above – that is 86 times more harmful than carbon dioxide at trapping heat and warming the environment.

If you didn’t know North Carolina even had a climate plan, you’re not alone. In 2021, North Carolina enacted House Bill 951, a law that requires the state to reduce carbon emissions by 70 percent below 2005 levels by 2030 and to achieve “carbon neutrality” by 2050. This mandate presented a significant opportunity to curb energy related causes of climate change in a meaningful, community-centered way. Unfortunately, the North Carolina Utilities Commission, charged with overseeing the state’s transition to carbon neutrality, chose to delegate the development of the “carbon plan” to Duke Energy – the very utility the Commission regulates. As it turns out, a monopoly utility with shareholder dividends at stake was not the best stakeholder to draft its own plan to reduce carbon emissions.

Instead of meeting the letter of the law, Duke Energy is now proposing 9,000 megawatts of new methane gas plants, three times its original 2022 request, and would delay the state’s climate goals. Duke Energy has submitted filings for two new methane gas power plants — one at the current Roxboro coal plant in Person County and another at the Marshall plant on Lake Norman. State law requires these plants to obtain a Certificate of Public Convenience and Necessity (CPCN), which authorizes a utility to construct a new facility within “the public interest.” It should be hard for even the savviest of energy executives to successfully argue that the widespread burning of natural gas from these plants, releasing nitrogen oxides and methane, linked to asthma, lung disease, and other problems for human health and the environment, such as poor air quality and climate change is in the “public interest.”

Duke Energy has warned that ratepayers’ bills will rise if they don’t build these plants. Citing its own employees’ figures, the corporation claims that building more natural gas is the “least cost” option to achieving the state’s climate goals. But independent research comes to a very different conclusion. Building out solar and utility-scale battery storage instead, without additional natural gas, would yield $8 to $12 billion in electricity savings by 2030 and $18 to $23 billion in savings by 2050, according to a 2022 report by Synapse Energy Economics, Inc., an independent research and consulting firm.

Of course, under Duke Energy’s own watch, ratepayers’ bills are already high and still rising — and mostly due to expected volatility in the price of methane gas. The prospect of yet more increases is both dreadfully real and will most acutely impact residents already struggling to keep the lights on. In 2023, the North Carolina Utilities Commission approved Duke’s request for rate increases to the tune of 14.6% for Duke Energy Carolinas customers and 11.3% for Duke Energy Progress customers. Again, according to Duke Energy, these increases are necessary to “maintain strong progress toward building a cleaner, more reliable energy future for our North Carolina customers while continuing to meet the energy demands of a growing and economically vibrant region.” Duke Energy’s own choice to hike its shareholder dividend goes oddly unmentioned.

This rate increase means a $200 monthly electric bill will rise to $230 per month, or nearly $3,000 per year. Millions of North Carolinians are not in a position to comfortably absorb such a rise in their cost of living: already, nearly 1.5 million people in the state are “overburdened” by energy costs, meaning that they pay more than 6 percent of their income on energy. Some even pay more for energy than for housing, according to the Department of Energy. This affordability crisis will only deepen with the unpredictable rate increases associated with Duke Energy’s proposed gas plants baked into its carbon plan.

The Environmental Defense Fund (EDF) recently released an analysis highlighting the connection between rising electricity rates and fuel prices. EDF found that in the Duke Energy Carolinas service territory, increases in fuel costs account for roughly 67% of the increase in residential retail rates since 2017. The study also found that the Duke Energy Carolinas service territory has been subjected to more rate hikes associated with high fuel costs because gas represents a higher percentage of its generation mix. In a similar vein, high gas prices contributed to bill increases in both of Duke’s territories, though the territory with more gas plants (DEC) was burdened with higher bill increases than the territory with fewer gas plants (DEP) as a result of high gas prices. The research is very clear: more methane gas means higher
energy bills, both now and into the future.

Costly and environmentally harmful methane gas plants call into question whose “public interest” they really serve. Duke Energy’s carbon plan is riddled with not only methane gas, but its own financial self-interest, and for this reason, North Carolina should say “No” to it. Duke’s polluting and costly plan will only further increase ratepayers’ bills and continue to hurt already overburdened residents.

For more information, read our full policy brief, and talk to your neighbors and your elected officials about the energy future you’d like to see.

Help build progress for North Carolina.

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